There’s a few questions you’re asking here. The etymology is basically that it comes from German, where the meaning of internal referred more to finding the underlying cause of diseases with an emphasis on using physiology and laboratory data. This originated in the 17th century. Americans studying on Europe later on (esp in the 19th century) brought the term back with them (and the specialty).
Others have addressed the functional difference, but in short an internist still focuses on finding the underlying roots of disease and often deals with cases that have more complicated, (often) multifactorial disease.
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